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Could You Live Without a Credit Card?

If one of your New Year’s resolutions this year was to get your debt under control, then it might be time to revert back to those credit-less days. In fact, the best way to control debt is to lock the credit cards away until everything is paid off. What would life without a credit card be like? What kinds of sacrifices would you have to make?

My First Credit Card Debt Spiral

When it came to credit I was what you could call a late bloomer. Each time I’d visit my bank they’d feed me the inevitable line, “In order to obtain credit, you’ve got to show that you have paid back a debt.” It seemed an impossible conundrum.

After years of rejection, my bank’s manager decided that he’d push my application through. Over the years we’d developed a relationship and he was willing to give me a chance. I was ecstatic. I could finally buy all those things that a credit card would allow. I’m sure I’m not the first person to abuse this power, and I definitely won’t be the last. At first, I’d only buy items I knew I could afford and I’d pay them off immediately. Eventually, though, I started purchasing items with an “I’ll-worry-about-this-later” kind of attitude. Eventually, I’d maxed out not one, but three credit cards. I knew it was time to regain control of my finances before debt got control of me. I locked up my credit cards and began the slow process of paying them off.

Giving Up Credit

Once you’ve had access to it, giving up your credit card seems an impossible task. It seems that everywhere you go, there are things you want to buy that require a credit card. At first, it was the impulse buys that I knew I couldn’t purchase, but then it became the necessities.

I quickly discovered that without a credit card, you can’t:

Rent a Car

No car rental company will allow you to rent a vehicle without a credit card. That’s just the way it is. On top of that, even if you could leave a hefty deposit, you wouldn’t be able to take advantage of the free insurance that most credit card companies offer on car rentals.

Rent a Bike, Kayak, or Canoe

This one surprised me. I totally forgot that you need a credit card to rent a kayak or bike. In fact, I didn’t actually realize until I was flat out rejected. Again, you can pay a sizeable deposit, but who carries that much money on them when they’re going canoeing? Needless to say, it was a long summer that year.

Start a Tab

There’s nothing quite like the feeling of starting a tab and treating your friends to a few after-work drinks. Unfortunately, you can’t start a tab without a credit card. Most bars and restaurants just won’t allow it.

Pay for Vacations

This was probably my biggest challenge. Although you can book a vacation through a travel agent in person (paying with cash or debit), you can’t take advantage of deals offered online. Sometimes you can’t purchase a ticket at all.

Take Advantage of Online Deals

Including travel expenses, most things can be found online for cheaper than in-store. The day I put away my credit card was the day I lost the ability to take advantage of online deals. It was probably for the best, though.

Buy Tickets to Concerts or Sporting Events

It’s 2013; who stands in line at Ticketmaster to purchase a concert ticket or Leafs tickets? No one. That’s because they sell out so quickly. Without a credit card, buying tickets online is next to impossible.

Pay for Emergencies

I know you’re not supposed to keep your credit card on hand for emergencies. Instead, you’re supposed to have an emergency fund on hand. If you’re someone who relies on your credit card for emergency funds, you should consider putting aside funds for this purpose instead.

Make Secure Purchases When Out of Country

Every time I travel to another country, I let my bank know so they don’t shut down my account when I use it. And every time I do this, the bank teller warns me about using my debit card or carrying a sizeable amount of cash in a foreign country. Instead, she advises that I carry my credit card. Without a credit card, you’re taking a risk every time you use your debit card in a foreign country.

A Possible Solution?

While it would seem that there isn’t a good solution to this problem and that you’ll just have to do without, I wouldn’t be so quick to give up. If you absolutely must have a credit card, consider a purchasing a pre-paid card. They can be used online, and I guarantee you’ll never spend more money than you have on hand.

Tip: If you absolutely can’t give up your cards, at least minimize the interest you’re paying on a monthly basis. Consider the switch to a low interest or low balance transfer credit card for the chance to pay down your balance faster. The MBNA Platinum Plus® MasterCard® Credit Card offers the best of both words – you’ll pay ZERO interest on transferred balances for the first 10 months, and 17.99% after that.

One thought on “Could You Live Without a Credit Card?”

There’s a difference between using a credit card as a payment device, versus using a credit card as a loan or debt instrument.

I use a PC Financial MasterCard for every single purchase I can. Everything from a $2.50 coffee to my monthly apartment rental payment. Anywhere I can pay via credit, I do.

I track and pay off — in full — my credit card balance biweekly. I don’t carry any balance on the card.

Why bother? Why not just use debit?

First, for the reasons you listed above — having a healthy credit card in good standing is helpful for my credit score, and also for buying online, having access to discounts, etc.

But more importantly, for the free PC Points!

I earn $50-$100 per month in free groceries by paying for everything using my PC MasterCard. In preparation for Christmas, I stopped cashing in my PC Points in September … and ended up having almost $400 in PC Points for the Christmas & New Years grocery bill.

I was able to take money I had otherwise set aside for groceries and throw it into a TFSA.